First, the Actavis decision is not limited to cash. The case itself involved not cash payments, but brand overpayments for generic services. In addition, the Supreme Court’s assertions on payments encompassed value from a generic’s reprieve from competition during its 180-day exclusivity period, as this period “can prove valuable, possibly ‘worth several hundred million dollars.’” Antitrust law makes clear that economic substance—not form—matters. And it does not make economic sense to apply Actavis to preclude antitrust scrutiny where, instead of overpaying for services, the brand pays the generic with real estate, gives the generic a lucrative business deal for free, or agrees not to launch its own generic version (known as an “authorized generic”).
Certain things are obvious. It was obvious in the oral arguments that it was a challenge for both the Supreme Court judges and the lawyers to distinguish between abstract ideas, ideas, computer programs, technological innovations, patentable subject matter, and inventions. This confusion also showed up in the seven different written opinions of the judges in the Appeals Court review of this same case… Mr. Perry was wrong about word processing and e-mail. Providing a “technical solution to a then unmet problem” and providing a “technological advance” often does not constitute making an invention. That’s because with computers you can often make a technical advance that is obvious.
While all nations have a great deal to gain from attracting foreign direct investment and research spending from multinational firms, developing nations in particular stand to gain tremendously. These investments create jobs, enhance productivity, and foster economic growth and development. However, robust intellectual property rights are a necessary prerequisite. The activists and government policymakers who claim that IP rights are a barrier to economic development have it backwards. Strong intellectual property rights incentivize innovation which facilitates economic growth and development.
Next, I tried to interest manufacturers in licenses. That went nowhere. One company officially told me no one would take me seriously until they were sued, so I set out to sue a few organizations that I felt were infringing. I could not find a law firm that would take the case. Firm after firm said they had a conflict of interest. This took years. As far as trying to manufacture, it seemed as though the train had left the station. What could I do? I could not get a major law firm to represent me in litigation because of client conflict, even when such firms were filing my patents. I could not go into manufacturing because I could not get funded. I could not sell licenses, even to infringers, because I had not sued them. This is when patent accumulators came into play. The opposition called them ‘trolls.’ To me, they were ‘saviors.’ They provide the experience and leverage individual inventors need to get the attention of those who take what they want without repercussion.
The purpose of the U.S. patent system has been to promote innovation. The various ”Patent Reform” bills will in fact retard innovation and cost America jobs. They are contrary to the Founding Fathers’ intent in Article 1, Section 8, Clause 8 of the Constitution, contrary to the policies of over 220 years of patent law, contrary to the advice of the Office of Advocacy of the Small Business Administration, and contrary to prior statements of President Obama.
Under the AIA and through its own initiatives, the USPTO has developed many programs that facilitate the prosecution of applications through the Office. Applicants should consider the usefulness of these programs in any on-going and newly filed U.S. patent applications.
In this Part IV, we will discuss the proposal that all interested parties by plaintiffs, the enhanced pleading requirements, limitations on discover and customer stays. While some of these provisions may seem to make sense on their surface, and tailored to provide greater transparency, the reality is that the provisions are extraordinarily burdensome. For example, as written one proposal would require a corporation bringing a patent infringement lawsuit to disclose every stockholder no matter how few shares are owned. Furthermore, by micromanaging patent litigation discretion will be taken away from district court judges while at the same time onerous obligations are placed on small businesses before they can even begin to assert patent infringement, which is problematic because so many entities already knowingly choose to infringe rather than negotiate licenses or engineer around patent rights.
As is evident from Figure 2, a significant problem affecting USPTO performance has been identified as the Request for Continued Examination (RCE) Backlog, which grow dramatically from 2009 into 2013. The intricacies of RCE practice go beyond the scope of this article, but it is RCE practice that is a primary problem facing the USPTO. At the end of the USPTO’s 2013 End of Fiscal Year, approximately 78,272 RCE applications were awaiting examination at the USPTO. These RCEs divert resources away from the examination of new applications.
In this Part III, we will discuss the Covered Business Methods (CBM) expansion and the proposed elimination of post grant review estoppel. If these provisions are enacted it will provide greater incentive to challenge granted patents, making serial challenges the new norm. This will substantially and negatively impact small business innovators who will be forced to continually fight to keep the patents they have obtained after having already spent many years during patent prosecution to obtain the rights. This means patent rights will never be more than an expectation and not a true property right. Therefore, if these provisions are enacted it will mean no patent is every truly safe, no title is every quieted, and this will substantially, and negatively, impact investment opportunity and ultimately the commercialization of innovations.
The US House passed the Innovation Act (HR3309) in December 2013. The Senate is now well on its way to incorporating this legislation which will make Americans poorer. The bills have many problems that will inhibit small inventors, but the most insidious are “Loser Pays” and “Pay to Play”. It changes the law, singling out inventors as a class so onerous that only they must pay the other side’s legal fees if they don’t win every claim. Pay to Play makes inventors guarantee payment up-front. Some proposed Senate bills (e.g.: S.1013 & S.1612) make sure that almost all Americans and most small companies will never be able to afford to enforce their patents on their inventions.
For small business, patents will become mostly unenforceable due to the proposed much higher upfront cost of litigation, thus making small business patents significantly less valuable. Loss of patent value constricts new company formation, chilling new investments, and choking job formation. Legislating disincentives for capital investments will result in the loss of many hundreds of billions of dollars of wealth in America and dry up the major source of new jobs, small inventing businesses… Patents are the number one indicator of regional wealth according to the Federal Reserve Bank… If these “Patent Reform” bills are signed into law, they will discourage small business patents, and the contrapositive indicates that we will be a poorer nation.
The above-enumerated problems of the current patent system are real and barriers to further innovation and job creation. But the solutions do not require a comprehensive definition of a troll to fix the patent system. Lady Justice is blindfolded for a purpose. Justice in the US should be meted out objectively regardless of identity. So too in the instant situation. It is not the identity of the actor that needs to be evaluated, but the character of the action. We need to assure that frivolous, predatory actions are penalized and prevent the abusive tactics used by many that harm our innovative culture.
An infringer can drag you through endless PTO rounds of attack, if necessary (taking into account the current stats, 1 round is likely enough!), and now the Judge will be equipped to create a series of high hurdles followed by summary execution. You think Tech Transfer has trouble with a Valley of Death attracting capital and enthusiasm now; just take their patents out and shoot them… that ought to help. Start-ups will have absolutely no basis in value except for a popularity contest. Whatever the IP is or was, is worthless, and can never be sold for any value because it can never be enforced. Take that ….tech transfer.
“Without a strong healthy business nothing else really matters–not even IP. A successful IP [plan] is one that follows the business and strategizes to meet its goals,” says Cynthia Raposo, Senior Vice President of Underarmour. The questions that need to be answered that go into formulating an intellectual property strategy–like when the company wants a profit, whether it is interested in attracting investors or academic collaborations or buyers, whether it will become a public or global company, what its niche in the market is, how fast developments in the field are– can’t be fully answered without not only consulting the business people, but being on the exact same page as them.
Invention, it has been shown, is driven primarily not by genius or happenstance but rather by markets and the expectation of the profit that can be gained by securing the patent rights to new technologies. Zorina Khan of Bowdoin College and the late Kenneth Sokoloff at UCLA found that among the “great inventors” of the 19th century, “their patterns of patenting were procyclical [and] responded to expected profit opportunities.” And as Khan noted elsewhere, “Ordinary people [are] stimulated by higher perceived returns or demand-side incentives to make long-term commitments to inventive activity.” By contrast, in countries without patent rights, Barro (1995) found that people have an “excessive incentive to copy” and insufficient incentive to invent for themselves. Moser (2004), meanwhile, reported that “inventors in countries without patent laws focus on a small set of industries … while innovation in countries with patent laws [is] much more diversified.”